Market Update - 12/23/2009

Both the SPX and Nasdaq made a new high again today, Dow continued to lag behind.

Yesterday, I said if the SPX made a new high today, it would mean that Minuette (ii) most likely ended at yesterday's low. Well, we did make a new high, but it wasn't in the fashion I thought we would. I was expecting a big move higher if wave (ii) ended yesterday. It looks like that subminuette wave v was an ending diagonal. See chart below.

I still think we come down to test 1110 before going higher. Perhaps bad data could do that tomorrow. Plus, we are also overbought on most time frames, the indicators need to recycle back down. There is a lot of support in the 1110 area. I expect it to hold for now.

As I said in my weekend update this past week, if the US Dollar pulls back in a Minor Wave 2, it will cause the Equity Markets to go on to make new highs. That's what happened today. The Dollar started to weaken, and stayed down all day. It finally caused the SPX to break over 1119, and make new highs at 1121.

With tomorrow being only a half day of trading, expect the market to be quiet. We may get another day like today where the data doesn't even effect the market. I guess that's what low volume does.